Q&A: ‘Parts of U.S. Visa Bill Discriminatory’

The president of India’s main software trade body has described parts of the proposed U.S. immigration legislation restricting the number of foreign skilled workers a company can employ as “discriminatory”.

The National Association of Software and Services Companies president Som Mittal, 60, said that restricting the number of H-1B visa holders will force Indian software firms to change their business models to remain competitive.

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H-1B visas are temporary work visas granted to foreign workers such as nurses and IT professionals who have specialized skills.

If passed the draft version of the legislation will limit the number of people with these visas a company can employ to 75% of the workforce. The proportion will then reduce further to 65% in the following year and 50% in subsequent years.

In an interview with The Wall Street Journal Thursday, Mr. Mittal spoke about what the planned changes could mean for Indian companies.

Edited excerpts:

The Wall Street Journal: What provisions in the new immigration bill worry Indian IT companies?

Som Mittal: There are some overall positive provisions such as increase in the number of H1 B visas, allowing foreign citizens to get green cards, removing country quotas.

We are most concerned about restrictive clauses, the majority of which, I think, are targeted at Indian companies, though the bill does not directly name Indian companies.

WSJ: Can you elaborate what those clauses say?

Mr. Mittal: They say if you have more than 15% of your employees on H-1B visas in the U.S., they cannot work at a customer site.

Secondly, there is this condition that if you have more than a certain percentage of your staff already on these visas, you don’t get any more.

We face the same problem that US companies have in hiring people in the U.S.

Why is Microsoft talking about more visas? Because they can’t hire locally. There is no one to hire. We are also struggling to hire people in America.

WSJ: The U.S. Senate is accusing Indian companies of abusing a visa system designed for would-be immigrants, and not guest workers. Are you looking for a separate visa category for guest workers?

Mr. Mittal: We have asked for one. The U.K. has an intra-company transfer visa. Switzerland, Japan, Germany and India have one. The U.S. doesn’t have one.

WSJ: How do you achieve those benchmark restrictions on the number of H-1B visa holders you can employ?

Mr. Mittal: The work that we are doing onshore–that model will change. We will do more work offshore. Today 55% of all global outsourcing [work] happens in India. That’s because there is a highly skilled labor-pool here available to them. Almost 80% of that work happens offshore, in India. [WSJ - The rest takes place in the U.S.] We need time to transition.

WSJ: Are there enough visas available for companies who require them? Is the shortage a recent trend?

Mr. Mittal: No one gets enough visas because there is an artificial cap. There are 65,000 H1B visas available in the general category, under which we all apply.

We faced a similar shortage between 2006 and 2008. After that, because demand came down, the same 65,000 lasted [from the start of the financial year in April] through February-March.

The economy is springing back, so the needs are more. This year the cap was reached within a week.

In this bill, they have rightly proposed an increase in visas to 110,000 from 65,000. We support it.

WSJ: When is this bill likely to take effect?

Mr. Mittal: In the fiscal year 2015.

WSJ: What are the cost implications of this bill on the business model of Indian software companies?

Mr. Mittal: We have an optimum mix onsite and offshore work. We will have to disrupt that. There is an indirect cost associated with moving things here. It adds to the burden. It adds to the quality of delivery.

WSJ: Do you see any chance that the controversial language of the bill will be toned down?

Mr. Mittal: There have been a number of bills in the past that we could weed out. If this was a standalone H-1B visa I don’t think it would have gone through. This is a comprehensive immigration bill. There is a momentum to get this bill passed.

We are only saying that vested interests have inserted restrictive conditions, which are discriminatory. It might not say it is for Indian companies but that’s what it is.

WSJ: So the far the Indian government’s response has been tepid. When can we expect a more forceful response from Indian government?

Mr. Mittal: Our ambassador to the U.S. weighed in, even before the bill came out. Our government and various ministries are also aware of it [the problems in the bill]. We are not going to let our companies’ business model get disrupted, because somebody wants a competitive advantage.

WSJ: In India’s mind, do any of the restrictions in the bill rise to the level of violation of World Trade Organization norms?

Mr. Mittal: Yes, it is clearly discriminatory and it would go to WTO.

WSJ: What’s the status of India’s pending complaint at WTO on the 2010 hike in visa fees?

Mr. Mittal: The comprehensive immigration reforms bill says that the Border Security bill introduced in 2010 will be withdrawn. So it is not going to be an additive increase on the visa fees.

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